The recent price action of the banking sector makes no sense whatsoever as I’ve been detailing. Over the short-term, the stock market can be extremely inefficient particularly in a panicked situation such as that which exists today. All of the facts indicate that the price of the common stock should be no lower than $60 and I believe there are many catalysts to get there and beyond. Firstly, stock buybacks are coming and they are going to be immensely accretive based on current prices. The CCAR process occurs in March and should open the door for this and will be a big catalyst in my estimation. It is very possible that Citi could buy back 1/10th of its shares, which would dramatically increase tangible and book value per share, while also growing earnings per share. Nothing could be more accretive than this so while it is painful in the short-term, this is really an opportunity to create more value. Often people send me articles disputing my investment theses. Almost all of these are based on technical analysis. I’m not a chartist, nor do I know any with strong and documentable long-term investment track records. In a bear or panicked market, almost every chart can be shown to look negative as I’ve seen through my career. At TTCM, we focus exclusively on facts and fundamental investment analysis.
“In the short-run, the market is a voting machine but in the long run, it is a weighing machine.” Benjamin Graham
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